Common shares outstanding plus shares underlying stock-based
awards outstanding totaled 446 million on June 30, 2008, compared with
435 million a year ago.

Net sales increased 41% to $4.06 billion in the second quarter,
compared with $2.89 billion in second quarter 2007. Excluding the
$0.18 billion favorable impact from year-over-year changes in foreign
exchange rates throughout the quarter, net sales grew 35% compared
with second quarter 2007.

Operating income increased 86% to $217 million in the second
quarter compared with $116 million in second quarter 2007. Excluding
the $17 million favorable impact from year-over-year changes in
foreign exchange rates throughout the quarter, operating income grew
71% compared with second quarter 2007. Included in the second quarter
2008 operating income is a $53 million non-cash gain recognized on the
sale of our European DVD rental assets.

Net income increased 102% to $158 million in the second quarter,
or $0.37 per diluted share, compared with net income of $78 million,
or $0.19 per diluted share, in second quarter 2007.

"Customers continue to take advantage of our low prices, free
shipping and Amazon Prime," said Jeff Bezos, founder and CEO of
Amazon.com. "Amazon Prime membership costs less than a tank of gas -
more and more customers are joining the program and enjoying its
benefits."

-- Worldwide Electronics & Other General Merchandise sales grew
58% to $1.53 billion in second quarter 2008, compared with
$0.97 billion in second quarter 2007, and increased to 38% of
worldwide net sales compared with 34%.

-- North America segment sales, representing the Company's U.S.
and Canadian sites, were $2.17 billion, up 35% from second
quarter 2007.

-- International segment sales, representing the Company's U.K.,
German, Japanese, French and Chinese sites, were $1.89
billion, up 47% from second quarter 2007, and increased to 47%
of worldwide net sales compared with 45%. Excluding the
favorable impact from year-over-year changes in foreign
exchange rates throughout the quarter, International sales
grew 34%.

-- Amazon.com customers can now take advantage of Bill Me Later,
a new alternative payment method. Bill Me Later's
next-generation payments service provides customers another
convenient payment option when shopping on Amazon.com.

-- The Company acquired Fabric.com, a leading online fabric store
that offers custom measured and cut fabrics, as well as
patterns, sewing tools and accessories.

-- Amazon.co.jp launched Convenience Store Pickup Service, which
offers customers the option to pick up their orders at any of
the 8,500 Lawson stores throughout Japan.

-- Over 400,000 developers have registered to use Amazon Web
Services (AWS), up more than 30,000 from last quarter.

-- AWS released a new family of instance types, the high CPU
family. These instances have proportionally more CPU resources
than RAM (compared to standard instances) and are well suited
for compute-intensive applications such as rendering, search
indexing and computational analysis.

-- Amazon.com introduced a limited beta version of Amazon Video
On Demand. The service lets customers rent or buy ad-free
movies and television shows and watch them instantly within
their web browser on Macs or PCs and through Sony BRAVIA
television sets with the use of the Sony BRAVIA Internet Video
Link.

-- Kindle selection continued to grow with more than 140,000
titles available.

Financial Guidance

The following forward-looking statements reflect Amazon.com's
expectations as of July 23, 2008. Results may be materially affected
by many factors, such as fluctuations in foreign exchange rates,
changes in global economic conditions and consumer spending, world
events, the rate of growth of the Internet and online commerce and the
various factors detailed below.

Third Quarter 2008 Guidance

-- Net sales are expected to be between $4.200 billion and $4.425
billion, or to grow between 29% and 36% compared with third
quarter 2007.

-- Operating income is expected to be between $115 million and
$160 million, or between 6% decline and 31% growth compared
with third quarter 2007. This guidance includes approximately
$80 million for stock-based compensation and amortization of
intangible assets, and it assumes, among other things, that no
additional business acquisitions or investments are concluded
and that there are no further revisions to stock-based
compensation estimates.

Full Year 2008 Expectations

-- Net sales are expected to be between $19.35 billion and $20.10
billion, or to grow between 30% and 35% compared with 2007.

-- Operating income is expected to be between $745 million and
$920 million, or to grow between 14% and 40% compared with
2007. This guidance includes approximately $295 million for
stock-based compensation and amortization of intangible
assets, and it assumes, among other things, that no additional
business acquisitions or investments are concluded and that
there are no further revisions to stock-based compensation
estimates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m.
ET, and will be available for at least three months at
www.amazon.com/ir. This call will contain forward-looking statements
and other material information regarding the Company's financial and
operating results.

These forward-looking statements are inherently difficult to
predict. Actual results could differ materially for a variety of
reasons, including, in addition to the factors discussed above, the
amount that Amazon.com invests in new business opportunities and the
timing of those investments, the mix of products sold to customers,
the mix of net sales derived from products as compared with services,
the extent to which we owe income taxes, competition, management of
growth, potential fluctuations in operating results, international
growth and expansion, the outcomes of legal proceedings and claims,
fulfillment center optimization, risks of inventory management,
seasonality, the degree to which the Company enters into, maintains
and develops commercial agreements, acquisitions and strategic
transactions, and risks of fulfillment throughput and productivity.
Other risks and uncertainties include, among others, risks related to
new products, services and technologies, system interruptions,
significant indebtedness, government regulation and taxation, payments
and fraud. More information about factors that potentially could
affect Amazon.com's financial results is included in Amazon.com's
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 2007, and
subsequent filings.

About Amazon.com

Amazon.com, Inc. (NASDAQ: AMZN), a Fortune 500 company based in
Seattle, opened on the World Wide Web in July 1995 and today offers
Earth's Biggest Selection. Amazon.com, Inc. seeks to be Earth's most
customer-centric company, where customers can find and discover
anything they might want to buy online, and endeavors to offer its
customers the lowest possible prices. Amazon.com and other sellers
offer millions of unique new, refurbished and used items in categories
such as books, movies, music & games, digital downloads, electronics &
computers, home & garden, toys, kids & baby, grocery, apparel, shoes &
jewelry, health & beauty, sports & outdoors, tools, and auto &
industrial.

Quarterly Results of Operations (comparisons are with the
equivalent period of the prior year, unless otherwise stated)

Net Sales

-- Revenue is generally recorded gross for sales of our own
inventory and net for sales by other sellers. Amounts paid in
advance for subscription services, including amounts received
for Amazon Prime and other membership programs, are deferred
and recognized as revenue over the subscription term. For our
products with multiple elements, where a standalone value for
each element cannot be established, we recognize the revenue
and related cost over the estimated economic life of the
product.

-- Shipping revenue, which includes amounts earned from our
Amazon Prime membership and Fulfillment by Amazon programs,
was $186 million, up 22% from $152 million.

Cost of Sales

-- Cost of sales consists of the purchase price of products sold
by us, inbound and outbound shipping charges, packaging
supplies, and costs incurred in operating and staffing our
fulfillment and customer service centers on behalf of other
businesses.

-- Payment processing and related transaction costs, including
those associated with seller transactions, are classified in
"Fulfillment" on our consolidated statements of operations.

-- Shipping charges to receive products from our suppliers are
included in our inventory and recognized as "Cost of sales"
upon sale of products to our customers.

-- Outbound shipping costs totaled $314 million, up 38% from $227
million. Net shipping cost was $128 million, or 3.2% of net
sales, up 71% from $75 million, or 2.6% of net sales. One way
we offer lower prices is through free-shipping offers that
result in a net cost to us in delivery of products.

Operating Expenses

-- Depreciation expense for fixed assets, including amortization
of internal-use software and website development, was $74
million, up from $63 million. Depreciation is recorded on a
straight-line basis over the estimated useful lives of the
assets (generally two years or less for assets such as
internal-use software, two or three years for our technology
infrastructure, five years for furniture and fixtures, and ten
years for heavy equipment).

-- Stock-based compensation was $73 million, compared with $46
million. We utilize the accelerated, rather than a
straight-line, method for recognizing stock-based
compensation. Under this method, over 50% of the compensation
cost would be expensed in the first year of a typical
four-year vesting term. The increase in stock-based
compensation is primarily attributable to an increase in total
stock compensation value granted to our employees.

-- Operating expenses with and without stock-based compensation
are as follows:

-- Additionally, because payment processing costs associated with
seller transactions are based on the gross purchase price of
underlying transactions, and payment processing and related
transaction costs are higher as a percentage of revenue versus
our retail sales, sales by our sellers have higher fulfillment
costs as a percent of net sales.

-- We expanded our fulfillment capacity during the first six
months of 2008 and throughout 2007 through gains in
efficiencies and increases in leased warehouse space. This
expansion is designed to accommodate greater selection and
in-stock inventory levels and meet anticipated shipment
volumes from sales of our own products as well as sales by
third parties for whom we provide the fulfillment services.

Technology and Content

-- Technology and content expenses consist principally of payroll
and related expenses for employees involved in application
development, category expansion, editorial content, buying,
merchandising selection, and systems support, as well as costs
associated with the compute, storage and telecommunications
infrastructure.

-- We continue to invest in several areas of technology and
content including seller platforms, web services, and digital
initiatives, as well as expansion of new and existing product
categories. We are also investing in technology infrastructure
so that we can continue to enhance the customer experience and
improve our process efficiency and support our infrastructure
web services.

-- Certain costs relating to development of internal-use software
and website development, including development of software to
upgrade and enhance our websites and processes supporting our
business, are capitalized and amortized over two years.

-- During Q2 2008 and Q2 2007, we capitalized $41 million
(including $7 million of stock-based compensation) and $33
million (including $5 million of stock-based compensation) of
costs associated with internal-use software and website
development. Amortization of previously capitalized amounts
was $36 million and $28 million for Q2 2008 and Q2 2007.

Stockholders' Equity and Stock-Based Awards

-- As of June 30, 2008, outstanding common shares plus shares
underlying outstanding stock-based awards were 446 million, up
from 435 million as of June 30, 2007. This total includes all
stock-based awards outstanding, without regard for estimated
forfeitures, consisting of vested and unvested awards and
in-the-money and out-of-the-money stock options.

-- In Q2 2008, holders of our 4.75% Convertible Subordinated
Notes elected to convert a total of $473 million in
outstanding principal amount under a called redemption and we
issued 6.1 million shares of common stock as a result of such
elections.

-- As of June 30, 2008, stock-based awards outstanding were 19.8
million, or 4.6% of shares outstanding, down from 22.1
million, or 5.3% of outstanding shares. Outstanding stock
awards consist of 18.4 million shares of restricted stock
units and 1.4 million stock options with a $24.41
weighted-average exercise price.

-- We granted restricted stock units representing 4.5 million and
5.8 million shares of common stock during Q2 2008 and Q2 2007.

Other Operating Expense (Income), Net

-- Other operating expense (income), net, was $(45) million and
$3 million during Q2 2008 and Q2 2007. The increase compared
to comparable prior year periods is primarily attributable to
the gain recognized on the sale of our European DVD rental
assets. As a result of this transaction, we recorded a $53
million non-cash gain included in "Other operating expense
(income), net" on our consolidated statements of operations.
We believe that the positive impact of this gain on operating
and net income is not predictive of future results or trends.

Other Expense, Net

-- Other expense, net, consists primarily of gains or losses on
marketable securities, foreign-currency transaction gains and
losses, and other miscellaneous gains and losses.

-- The remeasurement of our 6.875% PEACS and intercompany
balances can result in significant gains and losses associated
with the effect of movements in currency exchange rates.

Income Taxes

-- Our provision for interim periods is determined using an
estimate of our annual effective tax rate adjusted for
discrete items, if any, that are taken into account in the
relevant period. Each quarter we update our estimate of the
annual effective tax rate, and if our estimated tax rate
changes we make a cumulative adjustment. The 2008 annual
effective tax rate is estimated to be lower than the 35% U.S.
federal statutory rate primarily due to anticipated earnings
of our subsidiaries outside of the U.S. in jurisdictions where
our effective tax rate is lower than in the U.S.

-- Included in the total tax provision as a discrete item during
Q2 2008 is the impact related to the $53 million non-cash gain
associated with the sale of our European DVD rental assets.
This gain will be taxed at rates substantially below the 35%
U.S. federal statutory rate.

-- A majority of our tax provision is non-cash. We have current
tax benefits and net operating losses relating to excess
stock-based compensation that are being utilized to reduce our
taxable income. As such, cash paid for income taxes in Q2 2008
was $15 million compared with $7 million in Q2 2007.

-- We are under examination, or may be subject to examination, by
the Internal Revenue Service ("IRS") for calendar years 2004
through 2007. Additionally, any net operating losses that were
generated in prior years and utilized in these years may also
be subject to examination by the IRS. We are under
examination, or may be subject to examination, in the
following major jurisdictions for the years specified:
Kentucky for 2003 through 2007, France for 2005 through 2007,
Germany for 2003 through 2007, Luxembourg for 2003 through
2007, and the United Kingdom for 1999 through 2007. In
addition, in 2007, Japanese tax authorities assessed income
tax, including penalties and interest, of approximately $100
million against one of our U.S. subsidiaries for the years
2003 through 2005. We believe that these claims are without
merit and are disputing the assessment. Further proceedings on
the assessment will be stayed during negotiations between U.S.
and Japanese authorities over the double taxation issues the
assessment raises, and we have provided bank guarantees to
suspend enforcement of the assessment. We also may be subject
to income tax examination by Japanese tax authorities for 2006
and 2007.

Foreign Exchange

-- The effect on our consolidated statements of operations from
year-over-year changes in exchange rates versus the U.S.
dollar throughout the period is as follows:

(1) Represents the outcome that would have resulted had exchange
rates in the reported period been the same as those in effect in the
comparable prior year period for operating results, and if we did not
incur the variability associated with remeasurements for our 6.875%
PEACS and intercompany balances.

(2) Represents the increase or decrease in reported amounts
resulting from changes in exchange rates from those in effect in the
comparable prior year period for operating results, and if we did not
incur the variability associated with remeasurements for our 6.875%
PEACS and intercompany balances.

(3) Includes foreign-currency gains and losses on cross-currency
investments, remeasurement of 6.875% PEACS, and intercompany balances.

Cash Flows and Balance Sheet

-- SFAS 123(R) requires tax benefits relating to excess
stock-based compensation to be presented as financing cash
flows. Excess tax benefits from stock-based compensation were
$43 million in Q2 2008 and $304 million for the trailing
twelve months, compared with $35 million in Q2 2007 and $133
million for the trailing twelve months ended June 30, 2007.

-- Our cash, cash equivalents and marketable securities of $2.38
billion, at fair value, primarily consist of cash, investment
grade securities and AAA-rated money market mutual funds.
Included are amounts held in foreign currencies of $1.14
billion, primarily in Euros, British Pounds and Japanese Yen.

-- Other assets include, among other things, $245 million of
marketable securities restricted for longer than one year,
$250 million of certain equity investments, $149 million of
other intangibles, net, and $42 million of intellectual
property rights. Marketable securities restricted for longer
than one year relate primarily to collateralization of bank
guarantees and debt for our international operations.

-- Accrued expenses and other current liabilities include, among
other things, liabilities for gift certificates of $206
million, professional fees, marketing activities, workforce
costs - including accrued payroll, vacation and other benefits
- and unearned revenue of $138 million, which is recorded when
payments are received in advance of performing our service
obligations and is recognized over the service period.

(1) The 4.75% Convertible Subordinated Notes due 2009 (the "4.75%
Convertible Subordinated Notes") are convertible into our common stock
at the holders' option at a conversion price of $78.0275 per share.
Total common stock issuable upon conversion of our outstanding 4.75%
Convertible Subordinated Notes is 5.1 million shares, which is
excluded from our calculation of earnings per share as its effect is
currently anti-dilutive. We have the right to redeem the 4.75%
Convertible Subordinated Notes, in whole or in part, by paying the
principal and a redemption premium, plus any accrued and unpaid
interest. At June 30, 2008, the redemption premium was 0.475%.

(2) The 6.875% Premium Adjustable Convertible Securities ("6.875%
PEACS") are convertible into our common stock at the holders' option
at a conversion price of EUR 84.883 per share ($133.72 per share,
based on the exchange rate as of June 30, 2008). Total common stock
issuable upon conversion of our outstanding 6.875% PEACS is
2.8 million shares, which is excluded from our calculation of earnings
per share as its effect is currently anti-dilutive. The U.S. Dollar
equivalent principal, interest, and conversion price fluctuate based
on the Euro/U.S. Dollar exchange ratio. We have the right to redeem
the 6.875% PEACS, in whole or in part, by paying the principal plus
any accrued and unpaid interest.

-- In December 2007, we entered into a series of leases and other
agreements for the lease of corporate office space to be
developed in Seattle, Washington with initial terms of up to
16 years commencing on completion of development in 2010 and
2012 and options to extend for two five year periods. Under
the agreements we committed to occupy approximately 820,000
square feet of office space. We recently committed to occupy
an additional approximately 540,000 square feet. Due to that
commitment, and the receipt of certain zoning approvals, we
are no longer subject to the initial termination fees. We also
have an option to lease approximately 330,000 square feet at
pre-negotiated rates as well as options to lease up to an
additional approximately 500,000 square feet at rates based on
fair market values at the time the options are exercised,
subject to certain conditions. In addition, if interest rates
exceed a certain threshold, we have the option to provide
financing for some of the buildings.

Certain Definitions and Other

-- We present segment information for North America and
International. We measure operating results of our segments
using an internal performance measure of direct segment
operating expenses that excludes stock-based compensation and
other operating expense, each of which is not allocated to
segment results. Other centrally incurred operating costs are
fully allocated to segment results. Our operating results,
particularly for the International segment, are affected by
movements in foreign exchange rates. A significant majority of
our technology costs are incurred in the U.S. and most of them
are allocated to our North America segment.

-- The North America segment consists of amounts earned from
retail sales of products (including from sellers) and
subscriptions through North America-focused websites such as
www.amazon.com, www.audible.com, www.shopbop.com,
www.endless.com and www.amazon.ca; from our Amazon Prime
membership program; and from non-retail activities such as our
North America-focused Amazon Enterprise Solutions program,
Amazon Web Services, and marketing and promotional agreements.
This segment includes export sales from www.amazon.com and
www.amazon.ca.

-- The International segment consists of amounts earned from
retail sales of consumer products (including from sellers) and
subscriptions through internationally focused websites such as
www.amazon.co.uk, www.amazon.de, www.amazon.co.jp,
www.amazon.fr, and our Joyo Amazon websites at www.joyo.cn and
www.amazon.cn; from our Amazon Prime membership program; and
from non-retail activities such as internationally-focused
Amazon Enterprise Solutions program, marketing and promotional
agreements. This segment includes export sales from these
internationally based sites (including export sales from these
sites to customers in the U.S. and Canada), but excludes
export sales from www.amazon.com and www.amazon.ca.

-- We provide supplemental sales information within each segment
for three categories: Media, Electronics and Other General
Merchandise, and Other. Media consists of amounts earned from
retail sales from all sellers in categories such as books,
movies, music, digital downloads, software and video games
(including game consoles). Electronics and Other General
Merchandise consists of amounts earned from retail sales from
all sellers of items in categories not included in Media, such
as electronics and computers, devices, home and garden, toys,
kids and baby, grocery, apparel, shoes and jewelry, health and
beauty, sports and outdoors, tools, and auto and industrial.
Other consists of non-retail activities, such as the Amazon
Enterprise Solutions program, Amazon Web Services, and
miscellaneous marketing and promotional activities, such as
our co-branded credit card programs.

-- Operating cycle is number of days of sales in inventory plus
number of days of sales in trade accounts receivable minus
accounts payable days. Accounts payable days are calculated as
the quotient of ending accounts payable to cost of sales,
multiplied by the number of days in the period. Inventory
turns are calculated as the quotient of trailing-twelve-month
cost of sales to average inventory over five quarter ends.

-- Return on invested capital is trailing-twelve-month free cash
flow divided by average total assets less current liabilities
(excluding current portion of our long-term debt) over five
quarter ends.

-- References to customers mean customer accounts, which are
unique e-mail addresses, established either when a customer's
initial order is shipped or when a customer orders from other
sellers on our websites. Customer accounts exclude certain
customers, including customers associated with certain of our
acquisitions (including Joyo.com customers), Amazon Enterprise
Solutions program customers, Amazon.com Payments customers,
Amazon Web Services customers, and the customers of select
companies with whom we have a technology alliance or marketing
and promotional relationship. Customers are considered active
when they have placed an order during the preceding
twelve-month period.

-- References to sellers means seller accounts, which are
established when a seller receives an order from a customer
account. Seller accounts exclude Amazon Enterprise Solutions
sellers. Sellers are considered active when they have received
an order from a customer during the preceding twelve-month
period.

-- References to units mean physical and digital units sold (net
of returns and cancellations) by us and sellers at Amazon.com
domains worldwide - such as www.amazon.com, www.amazon.co.uk,
www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca
and the Joyo Amazon websites at www.joyo.cn and www.amazon.cn,
as well as Amazon.com-owned items sold through non-Amazon.com
domains, such as books, music and movie items ordered from
Amazon.com's store at www.target.com. Units sold do not
include units associated with certain of our acquisitions or
Amazon.com gift certificates.